Hours after a weary press conference preceded by a meeting with shareholders, Infosys CEO Vishal Sikka asserted his steely resolve to stay unperturbed over the recent events at the IT major. “I am a kshatriya warrior,” he said.
Sikka said the developments over the past week didn’t weigh him down and added that investors were concerned about the company’s performance and not the governance controversy. Less than 5-10 percent of investor’s questions were related to corporate governance issues, he said, adding that a majority of investors wanted to know about the company’s performance and macroeconomic factors.
Sikka appeared confident about his plans for Infosys. The company’s bigger endeavour is to transform business towards growth in the next generation, he said pointing out that automation will be key to the transformation. “I see tremendous amount of change in IT due to automation in next 3-5 years,” he said.
Severance Pay Reprobe Ruled Out
Meanwhile, Infosys Chairman R Seshasayee who spoke at length during the conference clarifying Infosys’ decisions — whether CFO Rajiv Bansal’s severance payout or his commander Sikka’s USD 11 million annual compensation — ruled out the need to revisit the disclosures made when Bansal left the company.
“I don't think there is a need for another probe,” he told CNBC-TV18. Earlier at the presser, he had said that out of the Rs 17.38 crore decided as severance pay to Bansal, only Rs 5.2 crore was paid. The payout was made after employing an independent firm which advised the figure after reviewing the company’s policies. Bansal had left the firm in October 2015.
Seshasayee said the company believes its compliance and disclosures follow corporate governance practices.
He, however, appeared receptive of Infosys founder NR Narayana Murthy’s concerns. The board understand the concerns of promoters and agree that resources have to be better utilised, he said.
He was, although, quick to say that all business judgements are capable of being reviewed in hindsight.Below is the transcript of R Seshasayee and Vishal Sikka’s interview to Shereen Bhan on CNBC-TV18. Q: You have addressed several queries that the media has put forward to you. Let me quote to you what Mr Murthy has said in an email that was sent to me earlier this morning. He said that concerns around board governance need to be addressed properly by the board with full transparency and it should be made accountable that people who are responsible for those decisions should be accountable. He also goes on to talk about the board that they are all good intentioned people of high integrity but obviously, being human, even good people sometimes make mistakes. This is one such case, but good leadership demands that they listen to all concerned stakeholders, re-evaluate their decision and take corrective action. Let me start by asking you because you are the Chairman of the board. How do you interpret that statement from Mr Murthy and when he talks about corrective action, what should that mean?
Seshasayee: Very positively. I interpret this very positively. Things where he believes that we should move to even higher standards of transparency or even better business judgements, there is no reason why we should have any objection to it which is what basically, we have been saying. If it is back to the question of severance pay and so on, he believes that we should exercise our mind even better which is fine. We understand that and we keep that in mind. Q: So, would acknowledge that yes, perhaps, there have been issues as far as board transparency is concerned on some of those issues, specifically pertaining to the severance packages given out to Rajiv Bansal as well as David Kennedy, moreover, several times during the course of that press conference, you said that yes, perhaps, you have not been able to articulate the rationale behind those decisions convincingly to the founders of the company? Would you admit that there has been a communication deficit, a communication gap?
Seshasayee: I will admit to two things. I will admit to the fact that when you make business judgements, there would be different viewpoints on this. At that point of time, when you are sitting, at that very moment, collectively, the decision that you take give the compulsions of what you see and the to make a judgement, in retrospect, even we ourselves would say that that is not the best of ways of doing it. All business judgements are capable of being audited in hindsight and therefore, you learn from that and I have no problem in that. I think that is fine.
But as regards the governance, certainly, I believe that whatever we have done in terms of compliances, disclosure requirements, investigations, all of that have been done in accordance with what we believe are good governance standards. Now, can we rise even higher than that in terms of disclosures? Murthy has said that if you are in doubt, you make disclosures. I like that. And we say that okay, in the case again, as I have mentioned earlier on, could we have called out even earlier, maybe we could have called out earlier. So, these are lessons. That is what Mr Murthy is driving at and that is the spirit in which I take what he has been saying. Q: Speaking of corrective action and I do not want to dwell on this specific issue, but I want to get you to answer the issue as far as the severance package to Rajiv Bansal is concerned. There is a call for another investigation into the issue. A lot of former Infoscions are asking for that. They are also saying that perhaps, full disclosure has not been made with respect to the investigation that was carried through. Is there a cause to revisit the issue in any form or fashion as far as the former CFO Rajiv Bansal is concerned, his several package is concerned? And explain to us, if a decision was taken, whether it was generous or not is a separate matter altogether, but if a decision was taken to pay a certain severance, why have you decided to hold it back?
Seshasayee: You asked me two questions. One is that do we need to re-probe that, I do not think so, because we have consulted the experts on this and they have said that whatever process we have gone through that is absolutely correct and we were quite conscious of that and despite, that we certainly thought that we could get some assurance which we have. So I do not think there is any need for looking at another probe. That is not the issue. But if you are saying that can we look at proactive and even higher levels of disclosures in the same thing going back beyond compliance requirements, there is always a scope for looking at it, as I said. Q: If I could ask you, you have spent the day today meeting investors. What are the questions that investors are asking you specifically when it comes to questions or concerns that had been raised pertaining to board governance? Are there asking you any questions about any of these issues? Do they care?
Sikka: Over the course of the day while I was with investors, I would say less than 10 percent, probably around 5 percent of the questions were around this particular set of matter – governance and so forth. Vast majority of the questions were about performance of the business and about the macro economic climate, the geo-political climate, role of automation and things of this nature. Q: So, no investors have asked you questions about the differences between the board as well as the founders and what this could mean as far as the company’s strategy is concerned?
Sikka: Many of them asked these questions. I am just saying that it is quite a small, minority of the questions were of this nature. Q: Are we to understand that there could be perhaps any changes as far as your current strategy is concerned – new and renew culture, you have spelt that out several times over over the past 2.5 years? While the founders have not specifically raised any concerns about strategic differences or the management’s role in functioning, they have raised concerns on board governance. Can we expect perhaps any shift or change in Infosys strategy?
Sikka: Strategy is a very universal one. I think as we go forward we will continue to elaborate on it and continue to make it more detailed and add more dimensions to that. However the basic foundation of renewal of the existing business, getting into completely new businesses and doing that on the basis of a common fabric of culture and values, this is something that is a long drawn idea. It is something that stands the test of time in fact. If you think through things and nature and complex systems in nature all evolve in this kind of a manner. So, in that sense it also mirrors the strategy of our clients that they have their existing businesses that they are interested in renewing and they have the desire to get into new areas which are unprecedented for them. So, those are on the basis of keeping their own culture intact and so on.
So, it is the strategy of our company and I expect that this will continue for a long time. Q: While you say that investors are not particularly perturbed or concerned by what has happened over the past week or so but if I may ask you a direct question, has what has happened over the past week, hit your confidence, do you feel weighed down by the events of the past week and also I believe that these concerns have been raised for months now. Do you believe that perhaps there has been some degree of not having proactively acted on the concerns that were raised?
Sikka: I don’t think if either one of those in that sense. They do take our attention away from the business. When this kind of an interest is there and you see the name splattered everywhere, it does take your attention away to those things. However it is our responsibility, our duty to not let that affect us. I try to stay focused on that. I wrote my email to Infosys employees which got out into the media. I used the name of this song Eardrum Buzz. Q: It is a different kind of ear drum, but let me ask you today, on the back of everything that has transpired, you remain committed to Infosys, you remain committed to your tenure at Infosys, you innings at Infosys, you remain committed to your plan for USD 20 billion in revenue by 2020?
Sikka: Absolutely. The bigger purpose here, the bigger endeavour here is the transformation of a business towards a relevance and thriving and growth in the next generation. When you walk around our floors of our industry, not only at Infosys but the industry in general, you realise that there is a tremendous amount of change that is going to happen in our industry. The role of automation, the role of digitisation of processes of our clients is going to have a massive impact on our industry over the next three, five, seven years. It is inevitable the way I see it.
As I have been saying for the last two and a half years, this is something that is bound to happen. There is no way around that. We can either let ourselves be affected and disrupted by it or we can get ahead of it and embrace this duality of automation of and innovation. In my mind, there is no other way and so taking a distinguished company like mine and elevating it towards an innovative company at a massive scale, that is quite a challenging and a fun endeavour and that is what, more than anything else, drives me. Q: So are you here to stay?
Sikka: Absolutely. I am a Kshatriya Warrior. Q: You talked about how Cyril Amarchand Mangaldas has been brought in to design a framework as far as corporate governance is concerned, what does that mean exactly? We know the law as far as corporate governance. You said that they will also help you put together a succession plan. Your term ends in 2018. Can you articulate for me what happens from here on? I also believe that the founders have suggested bringing on board what they see is certain value based people. Can you explain to us the next steps?
Seshasayee: We need to look at how to have a board that reflects the different interests of different shareholder groups. When we have a representation from different groups, how do we make sure that we do all these within the framework of what should be information flow from the company to shareholders? What manner should this be governed, for example, confidentiality agreement or should it be in terms of nominee directors? How do we preserve the independence of the board? How do we classify the directors as independent or non-independent?
All of this will require some deliberations because this is a board that I believe that needs to be evolved in a way that it represents a vast body of shareholders and in that of course, promoters are an important group and we will make sure that those values that promoters want us to imbibe are also fully represented within the total board composition. That is where you call a third-party consultant who will develop this framework for doing it.